Five Energy Winners for 2014
Look for These Trends to Dominate the New Year
These five trends are set to dominate the energy space in 2014...
The Mexican People
The Mexican government just overturned its constitution, opening up the door for companies other than PEMEX to explore for and develop oil. The IEA estimates that the country has more undiscovered oil than anywhere else on earth with the exception of the Arctic.
Big oil companies like Exxon Mobil, BP, Sinopec, and Halliburton will benefit, as the new black gold rush is on. Look to the Chinese to be big players south of the border.
This next flood of fracking profits will put a lid on rising oil prices and create a boom industry for pipelines builders.
But the biggest winners will be the citizens of Mexico. One of the oldest and most corrupt government institutions will be cast in the antiseptic light of competition, and this will lead to more revenue, a surge of jobs, and a lower price for the most basic commodities: oil and gas.
The U.S. Consumer
After five years of the fracking revolution, the U.S. is now battling it out with Russia to become the largest producer of oil and gas in the world. The U.S. is even forecast to overtake Saudi Arabia as the largest producer of oil as soon as 2015.
The rise of hydraulic fracking in the U.S. has stabilized global oil prices, eased prices at the gas pump, and reduced heating and electric bills for almost every American to the tune of $1,200 per household.
At the same time, cheap utility bills have boosted U.S. manufacturing as a number of top-name companies from Dow Chemical to Apple Computers have made plans to build manufacturing plants in the U.S.
Off-shoring American jobs to China will reverse. On-shoring to take advantage of low input costs and propinquity to end markets will be the new trend in 2014. But don't expect massive new factory jobs, as innovative, low-cost robots will replace workers in these new factories.
There are now more millionaires in Houston than in Silicon Valley. From 2007 to the end of 2012, oil and gas jobs grew by 40%.
In 2014, the industry expects to hire 7.8% more university graduates than last year. If your offspring is looking for a career, there are worse places to find one. But those of us old enough to remember the boom-bust of Houston in the late 1980s know oil is a cyclical beast, and four years from now might prove to be too late.
BP and ConocoPhillips have announced major new finds in the Gulf of Mexico. Estimates are that the companies may have found more than 3 billion barrels of oil 250 miles south of New Orleans.
This, coupled with the opening of Mexican waters to foreign competition, means that deepwater drill ships will be in high demand.
But offshore wells can easily cost more than $100 million without any guarantee of finding money-producing wells. This means new seismic software and massive super-computers will continue to boom along with underwater drone-type robotic submarines that will record oil flows in real time.
The Return of Hydrogen Fuel Cells
Perhaps the least talked about and most forgotten energy technology of the past ten years is hydrogen fuel cells. You may remember Ballard Power's promise of zero-emission cars will long range capabilities. After many years in the desert, these companies are starting to move.
One of my buys in my trading service Crisis and Opportunity is Plug Power (NASDAQ: PLUG), a company that makes hydrogen fuel cell engines for forklifts, among other things. The company jumped 26% today on news of a new contract. It is still below $2.
The technology has reached a tipping point. It now has the ability to store previously unused energy — flare-offs and unused wind, for example — for later use in vehicles, manufacturing plants, or on-site oil rigs.
Look for hydrogen fuel cells to have a big year in 2014.
Here's to a profitable new year,
Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor's page.
Energy Demand will Increase 58% Over the Next 25 Years
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